DISCUSSION PAPER SERIES IZA DP No. 11029 Where Are Migrants from? Inter- vs. Intra-Provincial Rural-Urban Migration in China Yaqin Su Petros Tesfazion Zhong Zhao SEPTEMBER 2017 DISCUSSION PAPER SERIES IZA DP No. 11029 Where Are Migrants from? Inter- vs. Intra-Provincial Rural-Urban Migration in China Yaqin Su Hunan University Petros Tesfazion Central College Zhong Zhao Renmin University of China and IZA SEPTEMBER 2017 Any opinions expressed in this paper are those of the author(s) and not those of IZA. Research published in this series may include views on policy, but IZA takes no institutional policy positions. The IZA research network is committed to the IZA Guiding Principles of Research Integrity. The IZA Institute of Labor Economics is an independent economic research institute that conducts research in labor economics and offers evidence-based policy advice on labor market issues. Supported by the Deutsche Post Foundation, IZA runs the world’s largest network of economists, whose research aims to provide answers to the global labor market challenges of our time. Our key objective is to build bridges between academic research, policymakers and society. IZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author. IZA – Institute of Labor Economics Schaumburg-Lippe-Straße 5–9 Phone: +49-228-3894-0 53113 Bonn, Germany Email: [email protected] www.iza.org IZA DP No. 11029 SEPTEMBER 2017 ABSTRACT Where Are Migrants from? Inter- vs. Intra-Provincial Rural-Urban Migration in China* Using a representative sample of rural migrants in cities, this paper investigates where the migrants in urban China come from, paying close attention to intra-provincial vs. inter- provincial migrants, and examining the differences in their personal attributes. We find that migrants who have come within the province differ significantly from those who have come from outside of the province. Using a nested logit model, we find that overall, higher wage differentials, larger population size, higher GDP per capita, and faster employment growth rate are the attributes of a city that attract migrants from both within and outside province. In addition, moving beyond one’s home province has a strong deterrent effect on migration, analogous to the “border effect” identified in international migration studies. We also explore the role of culture, institutional barrier, and dialect in explaining such a pronounced “border effect”. JEL Classification: J62, O15 Keywords: rural-urban migration, inter- vs. intra-provincial migration, border effect, China Corresponding author: Zhong Zhao School of Labor and Human Resources Renmin University of China 59 Zhongguancun St. Beijing 100872 China E-mail: [email protected] * We are very grateful for comments from Belton M. Fleisher (editor), Xiaojun Wang (guest editor) and an anonymous referee. The collection of the Rural Urban Migration in China (RUMiC) data used in this paper is financed by IZA, ARC/AusAid, the Ford Foundation, and the Ministry of Labor and Social Security of China. Zhong Zhao would like to acknowledge financial support by Renmin University of China: the special developing and guiding fund for building world-class universities (disciplines) (Project No. 16XNL005). 1. Introduction China has witnessed an extraordinary internal migration unparalleled in world history. Since 1979, over 500 million people have been added to China’s urban population, of which 78 percent was attributable to rural-to-urban migrants. As China moves away from its export-driven growth to focus on stimulating domestic demand, the consumption and investment potentials brought by migrants will play a critical role in sustaining the long term economic growth of Chinese cities. Meanwhile, the Chinese government has pledged to gradually relax the household registration system, known as hukou, in an attempt to encourage labor mobility and stimulate spending in cities. Based on the latest survey of the National Bureau of Statistics (NBS), in 2015 there are a total of 277 million rural workers in China, among which 168 million are rural migrant workers who have left the village or town associated with their hukou and sought employment elsewhere. As indicated in Figure 1, the number of rural migrant workers has grown from 104 million in 2002 to 168 million in 2015, despite the fact that the rate of growth has declined sharply since 2010. In 2015, 45.9% of rural migrants are inter-provincial migrants, while 54.1% are intra-provincial migrants. The share of migrants who choose to work at prefectural-level cities or above is 80% for inter-provincial migrants, and 54.6% for intra-provincial migrants. Rural-urban migration in China has been intensely studied from various perspectives over the past two decades, primarily due to its inextricable link with China’s ongoing urbanization process and its profound social ramifications. For examples, there are many studies that examine the discrimination against rural migrants and their inferior social and labor market positions (e.g., Chan and Buckingham, 2008; Chan and Zhang 1999). The main consensus is that the majority of rural migrants in cities lead second-class lives without much access to urban benefits. Studies have also suggested negative health and wellbeing consequences of rural-urban migration to migrants themselves (Song and Sun, 2015), and to the elderly and children left behind in the rural areas (Ao, Jiang, and Zhao, 2016; Li, Liu, and Zang, 2015; Xu and Xie, 2015; Murphy, Zhou, and Tao, 2015; Logan, 2011; De Brauw and Mu, 2011; Lee, 2011). An important strand of research is on rural-urban migration decision and determinants, e.g. Zhao (1999a, b), Zhu (2002) and Cheng et al (2006).1 Although 1 We will review related literature in next section. 1 previous research has generated an impressive body of work, most of the existing studies are from the perspective of migrant sending area, and there are few studies from the perspective of the urban area, e.g., where do the migrants come from? Are the inter- and intra-provincial migrants different? Whether the cities are still able to attract cheap labor from the rural area? Which city attributes are attractive to migrants? These questions are important in several aspects. First, it is generally acknowledged that rural-urban migrants have greatly contributed to China’s economic growth by providing inexpensive labor to the manufacturing and service industries that have been rapidly expanding in urban China. However, since 2004, there has been mounting concerns regarding whether China has run out of the cheap surplus of rural workers, which could potentially curb the country’s future economic growth. Many studies claim that China has reached a “Lewis turning point” in economic development, demonstrated by rising wages in urban areas and the exhaustion of rural surplus labor (e.g., Cai and Wang, 2010; Garnaut and Song, 2013). In this context, examining which city attributes are attractive to a migrant is particularly relevant and meaningful. Second, the sources of migrants play an important role in shaping the spatial distribution of migrant populations. According to the NBS, the patterns of rural-urban migration have shown several changes in recent years. There has been a sudden drop in the proportion of rural workers undertaking inter-provincial migration recently: in 2011, intra-provincial migrants out-numbered inter-provincial ones. Meanwhile, the proportion of migrants flowing to the eastern region has shown a continuous decline. This can be due to a reduced rural-urban income gap; thus, more migrants prefer to find employment in close proximity of their rural hometown, which could further contribute to the economic development in rural areas. Third, migrant workers typically take the jobs at the lowest end of the earning spectrum and jobs shunned by local workers. Based on the Rural Urban Migration in China (RUMiC) data, a higher proportion of inter-provincial migrants are engaged in service jobs; more specifically, a larger share of them work in personal care jobs such as beauty services, barber, etc., whereas a smaller proportion work in restaurants. As the proportion of inter-provincial migration shrinks, the price associated with these services will increase, causing a higher living cost in cities. In sum, the research questions we aim to address in this paper are important from both urban and rural development perspectives; and are highly relevant for the welfare of both urban residents and rural migrants. 2 In this paper, we use a unique dataset that covers rural-urban migrant workers in 15 major migrant receiving cities in China; we aim to shed some light on rural-urban migration from an urban perspective, and try to answer the above questions. While many Chinese studies have focused on why a person migrates, this paper focuses on where a migrant comes from and what city attributes attract them. This paper distinguishes itself from the existing research in several aspects. First, it pays special attention to the composition of migrants in a destination city, and investigates the determinants of a migrant’s choice regarding moving within versus outside of his province of origin. We find strong evidence that personal attributes play an important role in this regard, a fact typically overlooked by studies using aggregated provincial data. Our empirical results